Hang Seng Index, ASX 200, Nikkei 225: China Inflation Sends Mixed Demand Signals (2024)

Pre-Fed Jitters and Global Market Trends

10-year US Treasury yields declined to 4.406% on Tuesday (June 11), delivering a mixed US session.

On Tuesday, the Nasdaq Composite Index and the advanced by 0.88% and 0.27%, respectively. However, the Dow bucked the trend, falling by 0.31%.

Uncertainty toward the Fed rate path set the tone for the Wednesday Asian session.

On Wednesday (June 12), no overnight US economic indicators affected the Asian morning session. The global financial markets remained fixated on the looming US CPI Report and the FOMC interest rate decision/economic projections/ press conference.

Economists forecast the US annual inflation rate to remain at 3.4% in May. Additionally, economists expect the core inflation rate to fall from 3.6% to 3.5%. Hotter-than-expected inflation figures could support more hawkish FOMC economic projections. The markets expect the Fed to stand pat later today, putting the FOMC economic projections and press conference in the spotlight.

The US Futures had a mixed start to the Asian session, with the Nasdaq mini up 11 points, while the Dow mini was down by 25.

China Inflation Numbers Affect Market Risk Sentiment

On Wednesday, inflation numbers from China contributed to the negative mood.

Producer prices declined 1.4% year-on-year in May after a 2.5% drop in April. Economists forecast producer prices to fall 1.5%.

Furthermore, consumer prices increased 0.3% year-on-year after a rise of 0.3% in April. Month-on-month, consumer prices unexpectedly fell by 0.1% after rising by 0.1% in April. Economists predicted consumer prices to remain unchanged in May.

The mixed report impacted buyer demand for riskier assets further.

Hang Seng Index and the Mainland China Markets Extend Losses on China Inflation

The mainland China indexes extended their losses from Tuesday, with inflation numbers from China impacting risk appetite. On Wednesday morning, the Shenzhen Composite Index and CSI 300 saw losses of 0.19% and 0.11%, respectively.

However, the Hang Seng Index saw heavier losses, declining by 1.19% in the morning session.

Real estate and tech stocks continued to trend lower as the Fed interest rate decision loomed. The Hang Seng Tech Index (HSTECH) declined by 1.13%, with the Hang Seng Mainland Properties Index (HSMPI) falling by 2.15%. China Evergrande New Energy Vehicle Group (0708) tumbled 20.93% on news of a possible loss of assets, including buildings.

Alibaba (9988) slid by 2.29%, with Baidu (9888) falling by 0.22%. Tencent Holdings (0700) bucked the early trend, gaining 0.13%.

Nikkei Trends Lower Despite the USD/JPY at 157

The Nikkei Index fell by 0.75% during the Wednesday morning session. Selling pressure overshadowed a USD/JPYhold onto the 157 handle.

Better-than-expected producer prices from Japan could influence the Bank of Japan interest rate trajectory. Producer prices increased by 0.7% in May after rising by 0.5% in April. A more hawkish Bank of Japan policy stance on Friday could drive buyer demand for the Yen and affect Nikkei 225-listed export stocks.

Retailing Co. Ltd. (9983) slid by 2.33% on Wednesday morning, with Sony Group Corporation (6758) falling by 1.31%. Tokyo Electron Ltd. (8035) and KDDI Corp. (9433) saw losses of 0.56% and 0.19%, respectively. Softbank Group Corp (9984) slipped by 0.03%.

ASX 200 Tracks the Dow into Negative Territory

On Wednesday morning, the ASX 200 was down 0.65%, tracking the Dow losses from Tuesday.

Fortescue Metals Group Ltd. (FMG) and Rio Tinto Group Ltd. (RIO) fell by 1.29% and 1.39%, respectively. BHP Group Ltd (BHP) declined by 0.85% as investors reacted to overnight iron ore spot losses.

Furthermore, bank stocks extended their losses from Tuesday. Commonwealth Bank of Australia (CBA) and National Australia Bank Ltd. (NAB) fell by 1.05% and 1.05%, respectively. ANZ Group Holdings Ltd. (ANZ) was down 0.69%, with Westpac Banking Corp. (WBC) falling by 0.62%.

Gold and tech stocks contributed to the early Wednesday losses. Northern Star Resources Ltd. (NST) and Evolution Mining Ltd (EVN) saw losses of 0.33% and 1.33%, respectively. Gold spot (XAU/USD) price trends continued influencing buyer demand for gold-related ASX 200-listed stocks.

The S&P/ASX All Technology Index fell by 0.68%.

However, WTI crude oil returned to the $78 handle, supporting buyer appetite for oil stocks.

Woodside Energy Group Ltd (WDS) and Santos Ltd (STO) advanced by 2.03% and 1.00%, respectively.

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